Hyperloop, flying cars part of Slovakia's startup craze

Slovakia's AeroMobil is competing with other companies to roll out a flying car, shown.

PRAGUE/BRATISLAVA -- An hour's drive from Bratislava, engineers are working up a prototype reminiscent of James Bond's extrication of a Soviet defector from the Slovak capital to Austria in the 1987 film, "The Living Daylights." Instead of a one-man capsule, the 3048mm (120-inch) high real-life version is designed to haul up to 50 passengers through a Hyperloop tube within eight minutes to Vienna.

C2i, the 11-year-old company started by Patrick Hessel, is one of dozens of on-the-edge firms popping up in recent years in the central European nation that is now seeing entrepreneurs trained abroad return to their homeland. They are taking advantage of cheap land and skilled workers to develop products from the Hyperloop capsule and plasma drills to flying cars.

"There is a startup hype in Slovakia," Hessel, the country's entrepreneur of the year, said from his factory in the Slovak town of Dunajska Streda. "The situation is very different from 10 or even five years ago."

While Slovakia will be in the spotlight after assuming the EU's rotating presidency when the union is trying to cope with the aftermath of the UK vote to leave it, the country also seeks to use the six months at the helm of the bloc to showcase its technological potential. The government's aim is to broaden the country's reputation beyond the world's largest carmaker per-capita and attract high-tech investors.

Following four decades of state-planned economy, entrepreneurship had a slow start in Slovakia after the 1989 fall of communism when many left the country of 5.4 million to pursue education and job opportunities in western Europe. After transforming itself into an automotive hub -- with about a million cars a year rolling off production lines at factories owned by Volkswagen Group, Kia Motors, and PSA Group -- a reverse "brain drain" is taking hold. And they are bringing foreign expertise with them.

"Considering that we are such a small country, we have been able to come up with quite a few innovative products," Deputy Economy Minister Rastislav Chovanec said in a phone interview. "The government wants the country to move in this direction."

With that in mind, Prime Minister Robert Fico's cabinet will host with the European Commission an innovation conference in late October that will highlight nano-, bio- and other advanced technologies. During a visit to Bratislava last month, EU's foreign policy chief Federica Mogherini met with representatives of a company that's designing what may be the world's first flying car.

Flying car

The yellow and grey hangar in the outskirts of the Slovak capital houses the two-decade-old brainchild of Stefan Klein, an engineer with a pilot license, and Juraj Vaculik, a former Velvet Revolution student leader and an advertising executive. The third generation of the model -- with retractable wings, a gasoline engine and a body that can handle highway speed -- has spent 7 1/2 hours in the air during test flights and is now displayed in the entrance lobby of the European Commission building in Brussels to underscore Slovakia's focus on new technologies.

The company, AeroMobil, is competing with visionaries like Google's billionaire co-founder Larry Page to roll out a flying car, but being first isn't the goal, said Chief Technical Officer Doug MacAndrew, a British automotive expert who has worked for Land Rover and McLaren. AeroMobil's next prototype, which now exists in life-size technical drawings on walls and a wooden mockup of the cockpit, will be the basis for the commercial model that may go on sale in 2018, MacAndrew said.

"We don't see this as a race," he said. "We see it as a technological journey. Being first would be nice, but not necessary."

While it's easier now to lure talent to eastern European startups, access to financing remains a more complicated issue. Unlike in western Europe and the U.S., where developed stock markets allow for initial public offerings to raise money, Slovak entrepreneurs are more dependent on private investors and EU grants. AeroMobil received a 6 million-euro ($6.7 million) subsidy from the government to cover research costs.

"The entire region is under-served in terms of venture capital," said Christian Mandl, a Belgium-born managing director of Bratislava-based Neulogy Ventures, which manages a 26 million euro fund that now invests in 30 companies. "For an investor this means an opportunity. In tech hubs such as London or Helsinki, valuations are much higher."

A euro also goes much farther in Slovakia for developers than in western Europe, Mandl said, and owners of startups are more aware how to stretch their budgets. Neulogy's list of investments includes Boldburg, a sound engineering company, MultiplexDXm, a biotech diagnostics designer, and software developer AgentBalance.

Returning East

C2i, the Hyperloop capsule designer, also produces carbon fiber bodies and components for the automotive companies such as Porsche and Bentley and light-weight, business-class airline seats. It was founded in 2005 by Hessel, a child of Slovak emigres who was raised in Germany and studied in the UK.

Hidden behind the production halls, in a gaping warehouse that will eventually be C2i's aerospace division, the carbon fiber capsule prototype has thousands of sensors embedded in its skin. Hessel is developing it for Hyperloop Transportation Technologies, a U.S.-based company seeking to make Elon Musk's futuristic idea a commercial business. It signed a memorandum of understanding with the Slovak government in March and is researching a possibility to link Bratislava with Vienna and Budapest.

Escaping to the west from totalitarianism, although in a less revolutionary manner than Timothy Dalton's trick in the Bond film, was a reality for many for decades. In a sort of cultural reverse-engineering, returning east to start businesses is now becoming increasingly common and Hessel says it has worked for him and others.

"When I came here, I was already a part of the startup scene in the UK, but found nothing here," he said. "Developing a physical product requires somebody with big-enough vision to be able to raise millions. We are no longer a startup, but I remember those times."